The Highs and Lows of the Company Formerly Known as HP

As the storied tech icon Hewlett-Packard launches a new era as two companies, it’s by no means clear that either can replicate HP’s past successes, as evidenced by the company’s most recent earnings report.

So this is a good time to revisit those wins and losses accruing since HP was founded by William Hewlett and David Packard in 1939.

For decades, HP (HPQ) has been noted for churning out well-engineered gear from oscillators to printers, PCs, servers, and storage. Rick Chernick, CEO of Camera Corner Connecting Point, a longtime HP reseller in Green Bay. Wis., said the irony is that HP hurt itself over the years by building printers that don’t fall apart. “It’s hard to keep selling stuff into accounts when the old stuff keeps running,” he said.

With that in mind, let’s go through some of HP’s high and low points over its long life.

HP’s $25 Billion Compaq Purchase

This was a mixed bag. Many observers slammed (and still slam) HP’s acquisition of Compaq, announced in 2001 and completed a year later after much controversy. But Patrick Moorhead, founder of Moor Insights & Technology, said Compaq gave HP a huge boost in PCs and servers at a time it needed it. HP’s Proliant servers were the top sellers “since the inception of the category, helped by Compaq,” he noted.

To be fair, that has become the de facto M.O. for many of the tech deals that followed.

The Reign of Carly Fiorina

By most accounts except her own, Carly Fiorina’s stay at Compaq was a mess. (See the Compaq deal above.)

When Fiorina joined HP in 1999, she ushered in the era of the celebrity CEO. At the Consumer Electronics Show in 2004, for example, she shared the stage with Ben Affleck, Jimmy Iovine, Sheryl Crow, The Edge, and Gwen Stefani. For what had been an engineering-focused company this seemed the ultimate victory of flash over substance. As was the “big” HP news at the event which was the Apple iPod by HP. Yes, as Steven Levy pointed out recently on Medium, the company that was known for its ability to invent was now slapping its label on someone else’s device.

HP bought Electronic Data Systems for $13.9 billion in 2008. The idea was that EDS would give HP a higher profile in high-end IT services—helping big businesses choose, install and run technology—so it could compete better with IBM(IBM). Beating IBM was something that very much interested then-HP chief executive Mark Hurd. Before launching this quest, HP had already broached then dropped an $18 billion bid for PricewaterhouseCoopers’ consulting business, which IBM subsequently bought for a mere $3.5 billion.

So, how did the EDS acquisition go? HP ended up taking an $8 billion write-off related to the purchase in 2012.

Autonomy. Just Autonomy

If you want to get a rise out of a past or current HP employee, mention the “A word.”

Autonomy was a London-based enterprise software company known for its search and augmented reality technologies. But from the minute word of HP’s proposed $11.1 billion purchase leaked, people were dumbfounded at the price. It was just too high.

Whitman is generally credited with providing adult supervision for a company that needed it and offering a reassuring presence for shell-shocked investors and analysts. Some joke that on the earnings calls, Whitman is something of an “analyst whisperer.”

She’s also been good at cultivating and repairing relationships with HP’s reseller partners—a key part of its sales strategy.

Whitman was named CEO after Apotheker and immediately said that HP was in the midst of a long-term, “multi-year” turnaround. Multi-year is not something anyone wanted to hear at that point, so that took guts.

But it’s not all good. Whitman, after all was on the board that approved the Autonomy deal. As Fortune pointed out in 2012:

On November 21, 2011, CEO Meg Whitman had touted Autonomy as HP’s “priority #1, 2 and 3 for 2012.” The entire current HP board, excluding new board member Ralph Whitworth, blessed the purchase. On November 20, 2012, Whitman announced an 85%, $8.8 billion write-down of the 2011 acquisition.

Hmmm.

The HP Board

Although many of the directors involved have moved on, HP’s board of a decade or so ago presided over a PR disaster. The “Pretext-gate” scandal erupted when it was discovered that the company hired investigators that illegally obtained phone records of and otherwise spied on its own board members and reporters. The goal? Find the leaks. And there were many, many leaks.

Check out this Barron’s story on Hurd’s email to employees to get the feel for what happened but the whole thing reeked of Nixonian paranoia. Board member Patricia Dunn took the fall, but no one bought that the misbehavior started or ended with her.

And many don’t believe the board’s habit of leaking to the press died after Pretext-gate. Apotheker’s proposed move to sell off HP’s PC business, for example, was leaked in 2010.

Palm Purchase

Hurd wanted HP to get into the mobile business where it was a laggard so in 2010, he announced plans to buy Palm Computing, home of the once-popular Palm Pilot, which had seen better days. The price was about $1 billion. Palm had a newish operating system for mobile, the webOS, but had been passed by in the smartphone market by Apple(AAPL) iPhone and Blackberry. At the time of the acquisition, HP promised to double-down in mobile. Fast forward a year, and HP, now run by Apotheker, blew up its brand-new webOS-based tablet after less than two months on the market.

Now HP’s idea is to offer private cloud technology that lets customers run variable workloads in their own data centers or on resources dedicated to them (not shared) in HP-run data centers. And it will offer ways for those customers to also connect to Amazon or Microsoft(MSFT) public clouds as needed in a hybrid cloud scenario. Hybrid cloud will let customers keep important data on their own servers and storage but put other data or other jobs onto shared public cloud resources.

The renovated HP garage and shed in Palo Alto, Calif.

Photograph by David Paul Morris — Bloomberg/Getty Images

The biggest challenge for both Hewlett Packard Enterprise and HP Inc. going forward is to prove that they are not just about rolling up acquired technologies but can return at least partly to HP’s roots of building innovative and solid technologies.

Salil Deshpande, managing director of Bain Capital Ventures—who did two internships at HP earlier in his career—said legacy companies including—but not limited to—HP seem to be more distribution and sales organizations than product builders.

Don’t get me wrong, sales organizations are important, but if the company doesn’t make a product people wants, they’re useless.